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The EU's Bottomless Subsidy Pit

Updated Nov. 1, 2000 12:01 a.m. ET

By Keith Marsden, an economist based in Geneva.

T oday a new front in the trans-Atlantic trade war is scheduled to open. Acting on an EU complaint, the World Trade Organization ruled last February that U.S. tax breaks to exporters with offshore subsidiaries (so-called Foreign-Sales Corporations) were illegal, and gave the U.S six months to repeal or amend its legislation. The U.S. House of Representatives responded by passing a new, WTO-compatible bill that would, if passed, provide a broader tax hedge for all foreign-source...